Chapter 11 Bankruptcy - Businesses Debt reorganization
Many businesses, for whatever reason or another, find themselves in financial straits unable to pay their creditors. When this happens, the threat of bankruptcy looms in not only the business owner's mind but also in the minds of the employees. By filing Chapter 11 bankruptcy with the courts, the business can stave off the creditors and stay in business while the courts help reorganize the debt owed and get a payment plan in place.
While individual people can file for Chapter 11, it is usually a move reserved for businesses in trouble. During the Chapter 11 process, the courts usually assign a trustee whose job is to look after the restructuring of the company's debt. This can entail assigning a special committee to look after the interests of the creditors as well as those entities that might own stock in the company.
Any plan developed during the Chapter 11 bankruptcy period has to be accepted and agreed upon by not only the creditors, but also holders of company stock or bonds. Then, the courts have to approve the reorganization plan. Sometimes, however, the courts can choose a restructuring route that the players in the Chapter 11 saga have not agreed upon. This often will happen if there is some dissention among the creditors and stockholders.
Chapter 11 is usually the best recourse for businesses facing financial difficulties. Many times, liquidating all the company assets under a Chapter 7 filing can bring in much less than what the company might be worth. Plus, with a Chapter 11 bankruptcy filing, the business can still remain open and employees would not have to lose their jobs during the process.
By retaining a bankruptcy lawyer, companies, especially the small business owners, can benefit from their expertise. Navigating the maze of Chapter 11 bankruptcy laws can be confusing. A lawyer can map out all the options available to the business owners who can help decide whether or not bankruptcy is the best recourse. Once determined that Chapter 11 is the solution, there would be paperwork and petitions to file with the courts. A bankruptcy lawyer would know all the steps in the process.
To many corporations, Chapter 11 is a way to save jobs and keep a business afloat. And with the changing bankruptcy laws, it is almost impossible for business owners to stay atop of the latest changes. By hiring a bankruptcy lawyer to handle the Chapter 11 filings and court petitions, proceedings can run more smoothly and cause less upheaval during a reorganization of the company. Contact us today.